Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

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The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

Assistant Edge

June 28, 2011

Comparing Small Business Owners and High-Growth Entrepreneurs

High-growth entrepreneurship - mostly from the technology industry - has become the poster child for U.S. business success. Start-up founders have rock star status, with their exploits covered in places like Vanity Fair and Rolling Stone in addition to the business press.

Yet high-growth entrepreneurial enterprises make up less than 1% of U.S. small businesses overall. This means, of course, that the vast majority of America's small business owners aren't high-growth entrepreneurs.

About 18 months ago we conducted a study to better understand if and how founders of high growth companies differ from their counterparts at more typical small businesses.

While there were similarities - both groups are dominated by middle-aged white men with signifcant industry experience - there were also substantial differences, including:

Education Levels: About 95% of high-growth entrepreneurs have graduated from college and 47% have advanced degrees. Slightly less than half (47%) of small business owners have graduated from college and only around 5% have advanced degrees.

Women-Owned Businesses: Women own roughly 30% of small businesses. While that's lower than their share of the overall workforce, it's significantly higher than the less than 7% of high-growth entrepreneurs who are female.

Motivation: The top reason for starting a company according to high-growth entrepreneurs was "building wealth." This was listed as the 4th reason by small business owners. Small business owners listed "working for yourself" as the top reason for starting their business. This came in as the 4th choice by high-growth entrepreneurs.

Also different was their views on work/life balance. Small business owners listed this as their 3rd most important motivation factor. Not surprising given the demands of high-growth firms, it didn't even show up on the high-growth entrepreneur motivation list.

The main reason we're interested in this topic is we believe policy makers are too focused on high-growth companies and entrepreneurs. We agree that thousands of U.S. high-growth companies (called Gazelles in policy circles) are very important sources of innovation, employment and economic growth.

But the millions of U.S. small businesses are also important - especially for groups underrepresented in high-growth firms (women, minorities, those without a college education).

Because of this, we think policy makers need a better understanding of not just high-growth firms and their founders, but also the less glamorous businesses and business owners that make up the vast majority of small businesses in the U.S. economy.

Note on the study: The study was not publically released, but due to the passage of time we can now release some of the data and results. While the study data is 2 years old, we don't think the demographic characteristics or motivations of either group have significantly changed since the data was collected.